Exam 6: Relevant Information for Decision Making With a Focus

Vineyard Company has three product lines: A,B and C.The following annual information is available: Assume Vineyard Company can increase the selling price of Product C to $30,000.Assume all other information remains the same.What will happen to operating income?

Sue is considering leaving her current position to open a coffee shop.Sue's current annual salary is $83,000.Annual coffee shop revenue and costs are estimated at $260,000 and $210,000,respectively.What is Sue's opportunity cost of opening the coffee shop in the first year?

________ costs are costs of manufacturing two or more products that are not separately identifiable as individual products until their split-off point.

Dally Company produces a part that is used in the manufacture of one of its products.The costs associated with the production of 5,000 units of this part are as follows: Of the fixed factory overhead costs,$72,000 are avoidable.Assuming there is no other use for the facilities.What is the highest price Dally Company should be willing to pay for 5,000 units of the part?

Johnson Company manufactures a part for its production cycle.The annual costs per unit for 10,000 units of the part are as follows: The fixed factory overhead costs are unavoidable.Spalding Company has offered to sell 10,000 units of the same part to Johnson Company for $60 per unit.The facilities currently used to make the part could be rented out to another manufacturer for $100,000 per year.Johnson Company should ________.

Down Corporation has a joint process that produces three products: P,G and A.Each product may be sold at split-off or processed further and then sold.Joint-processing costs for a year amount to $25,000.Other data follows: Processing Product G beyond the split-off point will cause profits to ________.

When managers are making a decision regarding adding or dropping a product,ethical considerations may also be influential.

The disposal value of old equipment is relevant in equipment replacement decisions.